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Washington Healthcare Update - Jan 23, 2017

This Week: In this week of transition, the Senate held its first hearing on the HHS secretary nominee and the Obama administration released its last set of regulations.

Health Reform Takeaway

CBO releases a report on the blueprint of the Republicans’ repeal plan and Republicans call it incomplete. The HELP Committee holds a hearing on Rep. Tom Price nomination for HHS secretary. The Republican plan to repeal and replace starts to slow down.

On Jan. 24, the House Ways & Means Committee will hold a hearing on ways to replace the ACA’s mandate to purchase health insurance. Repealing the Affordable Care Act’s individual mandate is viewed as a key component of congressional Republicans’ emerging plan to repeal and replace the Affordable Care Act, and replacing the mandate with alternative ways of ensuring continuous coverage is viewed as crucial to a stable insurance marketplace.

Ohio Gov. John Kasich told congressional Republicans that states should have the option of keeping Obamacare’s Medicaid expansion, and if Congress decides to pare back the program, it should retain expansion funding for low-income adults earning up to the federal poverty line.

In letters Kasich sent to the House and Senate, he said he is still supportive of Medicaid block grants.

An outspoken supporter of Medicaid expansion in Ohio, Kasich has said it has benefited 700,000 residents, brought the state’s uninsured rate to record lows and provided necessary treatment for those with substance abuse and mental health issues. Ohio is one of 16 states with Republican governors who have adopted that core piece of Obamacare.

Kasich also warned against repealing Obamacare without a replacement at the same time, writing that approach would create uncertainty for millions currently covered and could destabilize insurance markets.

Senate

Finance Committee Schedules Price HHS Hearing

The Senate Finance Committee will hold a Jan. 24 hearing on Rep. Tom Price’s (R-GA) nomination to lead HHS, the committee announced Jan. 17.

“Installing Dr. Price to lead HHS is a paramount step in repealing and replacing Obamacare with patient-centered reforms that address costs and increase choice,” Chairman Orrin Hatch said in a statement.

The announcement comes as Democrats have urged Republicans to slow down the nomination process to allow more time to scrutinize Price’s health care investments. Ron Wyden (OR), the top Democrat on the Finance Committee, criticized the decision to move forward with the hearing.

“Instead of confronting the serious issues raised about Congressman Price, Republicans are rushing to sneak his nomination through before all outstanding questions have been answered,” Wyden said.

Price went before the Senate HELP Committee on Jan. 18. At that hearing, Republicans praised him while Democrats grilled him on everything from his stock picks and ethics to asking him to pledge not to cut Medicare and Medicaid. He will likely face the same kind of questioning at finance.

GOP Governors Meet With Senate Finance Committee Regarding Medicaid

Republican governors and lieutenant governors from 10 states — including four that expanded Medicaid under Obamacare — discussed the future of Medicaid with Senate Finance Committee Republicans in Washington on Jan. 19, according to a Senate aide.

Committee Republicans held the closed-door meeting to get input on potential changes to the program, including what policies should be considered as part of an Obamacare replacement plan, how to keep Medicaid sustainable and whether states need more flexibility to enact reforms.

While the Republican governors oppose Obamacare and agree Medicaid needs changes, officials in states that expanded Medicaid are looking to protect health coverage for residents.

On Jan. 20, as one of his first acts, President Donald Trump issued an executive order that asks HHS and other agencies to exercise all authority under the law to ease the costs of the Affordable Care Act on individuals and industry, provide states flexibility and promote interstate commerce as Congress and the administration work to repeal the law. It is unclear what the new administration can do under the new executive order, but GOP lawmakers have long said the HHS secretary has wide-ranging flexibility when it comes to implementing the ACA.

“It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act,” Trump’s executive order states. “In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

The executive order continues: “To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

HHS Releases Final Revision of Common Rule

On Jan. 18, HHS issued a long-awaited revision of a rule establishing how to properly inform people enrolling in medical experiments about the risks and benefits of the research. The revision of the 1991 Common Rule dropped an earlier proposal that scientists said would have made much of their work impossible.

HHS and 15 other agencies issued a September 2015 proposed rewrite of the Common Rule that drew 2,100 comments, many of them opposing a provision requiring researchers to get consent for using nonidentified biospecimens like DNA samples. That part of the proposal was dropped in the new rule.

The final rule, most of which takes effect in 2018, calls for consent forms to include concise explanations of the purpose of a medical experiment, as well as the risks and benefits and alternative treatments a subject might want to consider.

CMS Releases Corrected Year 2 Results for Independence at Home Demo

On Jan. 19, CMS released the corrected Year 2 results for the Independence at Home Demonstration. The demonstration provides chronically ill patients with a complete range of primary care services in the home setting. Medical practices led by physicians or nurse practitioners provide primary care home visits tailored to the needs of beneficiaries with multiple chronic conditions and functional limitations. The demonstration also tests whether home-based care can reduce the need for hospitalization, improve patient and caregiver satisfaction, and lead to better health for beneficiaries and lower costs to Medicare.

In the second performance year of the demonstration, 10,484 beneficiaries were enrolled in the 15 participating practices. All 15 of the Independence at Home practices improved performance from the first performance year in at least two of the six quality measures for the demonstration. Four practices met the performance thresholds for all six quality measures.

In the original release of Performance Year 2 results in August 2016, CMS stated that the 15 participating practices saved $10,612,506 in aggregate, and that seven participating practices earned incentive payments of $5,719,526. After a corrected analysis, CMS stated that the practices saved $7,821,374 in aggregate, an average of $746 per beneficiary. Seven participating practices earned incentive payments in the amount of $5,093,105.

The new 2014 PUF has information for 15,026 skilled nursing facilities, almost 2.5 million stays and more than $27 billion in Medicare payments for 2014. New in the 2014 data is the demographic and chronic condition information. CMS protects beneficiaries’ personal information in all public data releases.

CMS Updates Open Payments Data

On Jan. 17, CMS updated the Open Payments dataset to reflect changes to the data that took place since the last publication on June 30, 2016. The updated dataset is now available for viewing here.

Every year, CMS updates the Open Payments data at least once to include updates from disputes and other data corrections made since the initial publication of the data. The updates affect all types of payments or transfers of value to physicians and teaching hospitals and physician ownership or investment interests.

The updated Open Payments dataset reflects:

Changes made to records

Changes to delays in publication flags

Changes to disputed records

Records that were deleted

The financial data was submitted by applicable manufacturers and group purchasing organizations (GPOs).

CMS Extends Meaningful Use Reporting Deadline

CMS has extended the deadline to March 13 for hospitals to submit data on meaningful use and the Hospital Inpatient Quality Reporting program, an agency official wrote in a blog post. The previous deadline was Feb. 28.

Hospitals stand to receive a 4 percent penalty in their Medicare payments if they fail to achieve meaningful use standards in data they report for 2016.

Kate Goodrich, CMS’s director of clinical standards and quality, said the agency also plans to address hospital concerns about switching EHR vendors or upgrading current systems in the agency’s annual inpatient hospital payment rule later this spring. CMS also is considering changing the number of required quality measures and shortening the reporting period.

On Jan. 18, FDA issued guidance outlining how drug companies can communicate with payers about cost-effectiveness and other economic information regarding their products without violating marketing regulations. The guidance also outlines how companies can discuss their products with insurers before agency approval.

The 1997 FDA Modernization Act gave companies some safe harbor protections to communicate economic information with payers, and the 21st Century Cures Act expanded these protections. But companies say they still fear talking about these issues because of a lack of clear FDA guardrails.

The new guidance describes what type of data qualify as health care economic information, how they can be presented and the appropriate audience for this communication. The guidance does not apply to communications with physicians and other health care providers, the agency notes.

The agency put out a memo expressing its views on the first amendment, public health and communicating about unapproved uses of drugs and medical devices. Companies have pressed FDA for clarity on marketing policies after a 2012 U.S. Court of Appeals decision ruled that under the First Amendment the government could not prohibit or criminalize the truthful off-label promotion of FDA-approved drugs.

Another guidance put out by FDA on Jan. 17 describes how drug companies can communicate some off-label information about their products and avoid charges of misbranding. Per this guidance companies can communicate only off-label information about FDA-approved uses of their products.

On Jan. 18, California asked to withdraw its request for undocumented immigrants to be allowed to purchase Obamacare plans entirely with their own funds, according to the state lawmaker who spearheaded the plan.

Supporters of the proposal had hoped it would be approved by HHS before the end of the Obama administration. But CMS took only an incremental step in the waiver process on Jan. 17, leaving the final decision to the incoming Trump administration, which is expected to be much more resistant to the plan.

California sought the Obamacare waiver under a part of the law that allows states to pursue their own health reform ideas beginning in 2017. But the gesture would have been mostly symbolic. State officials estimated that only 17,000 people would have enrolled in Obamacare plans if the proposal was approved because undocumented individuals wouldn’t be eligible to receive federal subsidies that lower premiums or out-of-pocket medical costs.

Democrats in California’s congressional delegation urged that the request be approved, but several Republican lawmakers said it should be rejected.

California: Exchange Mistake Causes Higher Premiums for Thousands

Almost 25,000 Covered California consumers will face higher-than-expected health insurance bills because the exchange sent the wrong subsidy information to their health plans. Insurers are reportedly sending out new bills based on accurate tax credits for those consumers, and in most cases that means higher premiums than consumers had anticipated. Covered California officials couldn’t explain the glitch, but it followed a mistake discovered last month that could have prevented as many as 24,000 consumers from receiving their 2017 subsidies, at least temporarily. About 1.4 million residents are enrolled in the California exchange.

Florida: Hospitals Unable to Access Low Income Pool Funds

Florida hospitals have not been able to access $608 million in supplemental Medicaid funds known as the Low Income Pool because the state hasn’t secured the local contributions necessary to fund the program. The state has been unable to send supplemental payments to any Florida hospital because the required local match has not been collected.

Jackson Memorial, Broward Health, Shands Healthcare and Tampa General, among others, notified the state that they would hold more than $200 million in local dollars normally sent to Tallahassee to fund the supplemental Medicaid programs until Florida persuades more hospitals to contribute. Florida uses the local contributions to pull down federal matching Medicaid dollars.

Minnesota: Minnesotans in Immigration Program Can Now Seek Health Coverage

Minnesota is now granting eligibility for subsidized health coverage to immigrants granted deferred action under former President Barack Obama’s controversial DACA program, which Trump has vowed to repeal. Deferred Action for Childhood Arrivals was created through an executive order by Obama and it allows deportation stays to people brought into the United States illegally as children. Minnesota estimates it can enroll some 6,000 recipients of DACA if they are income-eligible. Critics of the state’s move to extend health benefits to DACA recipients say it encourages illegal immigration. The idea was recommended by Gov. Mark Dayton’s health task force last year as a way to close health equity gaps.

New Jersey: State Attorney General Limits Opioid Prescriptions in Emergency Rule

Acting on a directive from Gov. Chris Christie, the state attorney general will use emergency rule-making powers to limit initial opioid prescriptions for acute pain to a five-day supply. Failure by providers to adhere to the new rules may result in a disciplinary hearing and the suspension or limitation of medical licenses, Attorney General Christopher Porrino wrote in a letter to the state’s board of medical examiners last week. He asked for the board to agree to the new regulations by Feb. 16.

A new RAND analysis of three proposals to cover Oregon’s remaining uninsured residents would be more expensive and difficult to implement if part or all of the ACA is rolled back. The study, requested by the Oregon Health Authority, found the two proposals that would provide universal coverage — a single-payer plan, and one that would rely on private coverage to achieve the same goal — would face obstacles in getting the federal waivers needed. A third proposal, a state-administered public option that would compete with private plans in Oregon’s ACA marketplace, would be the easiest to do, but it wouldn’t cover everyone. About 5 percent of the state’s residents remain uninsured. To see the study, click here.

In other news, Oregon lawmakers are trying to get ahead of expected federal rollbacks in care for reproductive health by pre-filing legislation — ahead of the Feb. 1 session start — that would require coverage for abortion, birth control, vasectomies and other health services. With H.B. 2232, the Reproductive Health Equity Act, Oregon joins several other states that are trying to preserve such benefits as coverage for contraception without a copayment. The abortion protection may be controversial, but the bill allows employers to make religious exemptions.

Tennessee: Lawmakers Introduce Bill to Switch to Medicaid Block Grant

Republican state lawmakers have introduced a bill that prepares Tennessee to switch to a Medicaid block grant, in case Trump and congressional Republicans make good on a plan to revamp the program financing. But the legislation would also pave the way for Tennessee to expand eligibility up to 138 percent of the federal poverty level as the ACA envisions. The block grant amount would take inflation into account as well as population growth.

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by the Secretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporate legislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structural revisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a 90-day comment period for this proposed notice that will end on Feb. 7, 2017.

CMS has issued a new proposed rule detailing regulations for pass-through payments to providers from Medicaid managed care plans. The guidance builds on the Medicaid managed care rule finalized by the Obama administration in May.

On Jan. 4, CMS released a Request for Information (RFI) seeking public input on potential adaptations of the model of care employed by the Program of All-Inclusive Care for the Elderly (PACE) for new populations, including individuals with physical disabilities, under the authority provided by the PACE Innovation Act. The PACE Innovation Act of 2015 (PIA) provides authority to test application of PACE-like models for additional populations, including populations under the age of 55 and those who do not qualify for a nursing home level of care, under Section 1115A of the Social Security Act.

The RFI includes two parts:

In the first part, CMS seeks comment on potential elements of a five-year PACE-like model test for individuals dually eligible for Medicare and Medicaid, age 21 and older, with disabilities that impair their mobility and who are assessed as requiring a nursing home level of care, among other eligibility criteria. We have provisionally named this model “Person Centered Community Care” or P3C. This potential model is designed to meet the requirements of a model test under Section 1115A of the Social Security Act and to adapt the PACE model of care for one population of focus. In addition to feedback on the potential elements of the P3C model described in the RFI, CMS seeks comment on the types of technical assistance that potential P3C organizations and states would require to participate in the model test.

In the second part of the RFI, CMS seeks information on additional specific populations whose health outcomes could benefit from enrollment in PACE-like models, and how the PACE model of care could be adapted to better serve the needs of these populations and the currently eligible population.

CMS is accepting feedback on this RFI until 5 p.m. EST on Feb. 10, 2017. Comments should be submitted electronically in PDF form to MMCOcapsmodel@cms.hhs.gov with the organization or individual submitting comments on the title of the document.

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutory requirements and specify: the qualifications needed for practitioners to furnish and fabricate prosthetics and custom-fabricated orthotics, and for qualified suppliers to fabricate prosthetics and custom-fabricated orthotics; accreditation requirements that qualified suppliers must meet in order to bill for prosthetics and custom‑fabricated orthotics; requirements that an organization must meet in order to accredit qualified suppliers to bill for prosthetics and custom-fabricated orthotics; and a timeframe by which qualified practitioners and qualified suppliers must meet the applicable licensure, certification and accreditation requirements. This rule would also remove the exemption from quality standards and accreditation that is currently in place in accordance with Section 1834(a)(20) of the Act for certain practitioners and suppliers who furnish or fabricate prosthetics and custom‑fabricated orthotics. In addition, this rule also includes authority for the Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that do not meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics and custom‑fabricated orthotics and qualified suppliers that fabricate or bill for prosthetics and custom‑fabricated orthotics would be subject to these requirements.

CMS will accept comments on the proposed rule until March 13, 2017, and will respond to comments in a final rule.

On Jan. 17, FDA outlined the criteria companies must meet to get a copycat biologic deemed interchangeable with its branded counterpart, a certification that paves the way for the cheaper products to be automatically substituted at the pharmacy level under state laws.

To get this designation, a biosimilar sponsor must show that its product can be expected to produce the same clinical result as the branded biologic in any given patient, for all of the drug’s approved uses, and that there are no risks if a patient is switched back and forth between the interchangeable biosimilar and the branded biologic, per draft guidance released by FDA.

Interchangeable biosimilars are expected to offer greater savings to the health system than biosimilars that lack this designation. Without the interchangeability designation a doctor must proactively write a prescription for the biosimilar.

The guidance outlines the types of studies and scientific data that companies will need to submit to FDA to get an interchangeable designation. When companies seek that designation, FDA recommends they seek approval for all of the branded biologic approved uses.

FDA is requesting comments on the draft guidance as well as a number of questions outlined in a Federal Register notice. FDA wants to know how it should regulate manufacturing changes of interchangeable products that occur after approval. The agency also wants to know how it should handle interchangeable designations if a branded biologic gets another use approved for the drug, after the interchangeable biosimilar is cleared by FDA.

FDA Releases Draft Guidance on Off-Label Drug Communication

On Jan. 17, FDA issued draft guidance that gives drug and device companies more flexibility to communicate off-label information about their products and avoid charges of misbranding. The new policy allows companies to promote a drug or device with information not on the agency-approved label as long as that information is truthful and non-misleading and is consistent with FDA-approved labeling.

Companies have asked FDA for clarity on marketing policies after a 2012 U.S. Court of Appeals decision ruled that under the First Amendment the government could not prohibit and criminalize the truthful off-label promotion of FDA-approved drugs.

The guidance outlines how FDA will determine whether a company’s communication is consistent with FDA’s required labeling. For example, companies will not be permitted to communicate information about the drug or device related to a use that has not yet been approved by FDA. They also can’t promote a patient population for the drug or device that has not been cleared by the agency.

The agency offers some examples of information companies could communicate that could be consistent with its FDA-required labels. For example, FDA said companies can promote testimony of patients who used the drug for its FDA-approved uses, such as the product’s effect on patients’ daily activities. Companies could also communicate long-term safety and efficacy information about products that were approved for chronic use based on a six-month trial, if the company now has data on the drug lasting a couple of years, FDA added.

The guidance also outlines the type of scientific data companies need to support their off-label claims. Comments on the draft are due in 60 days.

5. Reports

CBO Reports on Effects of Repealing Portions of the ACA

On Jan. 17, the Congressional Budget Office (CBO) released a report on the estimated changes in health insurance coverage and premiums that would result from leaving the Affordable Care Act’s insurance market reforms in place while repealing the law’s mandate penalties and subsidies. In brief, CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting that legislation would affect insurance coverage and premiums in these ways:

The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.

Premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent—relative to projections under current law—in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026.

Republicans are using their 2015 Obamacare repeal bill as a framework for their latest effort, although they have yet to release final details on how much of Obamacare they plan to repeal and what they intend to enact as a replacement. This report is based on the 2015 repeal legislation, and does not take into account any GOP plan that would replace Obamacare.

The new CBO report was prepared at the request of Senate Minority Leader Chuck Schumer and other Democratic leaders. It does a more in-depth analysis than what the office provided when the 2015 bill was debated. That bill was passed but President Barack Obama vetoed it.

On Jan. 17, GAO released a report on payments to Medicare Advantage organizations. Medicare Advantage organizations—which offer a private health plan alternative to traditional Medicare—were paid about $170 billion by the federal government and served nearly one-third of all Medicare beneficiaries in 2015. To help ensure appropriate payments, CMS collects data on the care and health status of Medicare Advantage enrollees.

GAO previously reported that CMS had not fully validated these data for completeness and accuracy. In this report, the agency found that CMS has conducted some, but not all, remaining validation steps.

On Jan. 18, GAO released a report on kidney disease research funding and priority setting. Given the high costs of the disease, GAO looked at how the federal government funds and prioritizes its research. The report found that the National Institutes of Health (NIH) spent $564 million on kidney disease research in 2015—an increase of 2.7 percent from 2014. Those funds supported a broad range of projects, including research on kidney donation. GAO describes how NIH sets priorities for kidney disease research.

About 17 percent of adults in the U.S. have chronic kidney disease. If the disease progresses to kidney failure, patients need dialysis or a kidney transplant to stay alive.

GAO Reports on FDA Foreign Drug Inspection Program

On Jan. 17, GAO released a report on FDA’s foreign drug inspection program. FDA uses a risk-based approach to select which manufacturing establishments to inspect. To help its inspection efforts, FDA opened offices in China, India, Europe and Latin America. GAO found that although FDA has improved the program, the agency has not assessed these offices’ contributions to drug safety, and nearly half of their authorized positions are unfilled. GAO made recommendations on how FDA can improve in these areas.

On Jan. 17, GAO issued its first annual outlook on the nation’s fiscal future. The report warns of mounting debt and other challenges, urges prompt action to address those challenges, and is designed to help inform Congress and the incoming administration. In the report, GAO urges the development of a long-term plan that will address levels of federal spending and investments and the options to obtain needed resources.

Federal spending continues to outpace revenue—by $587 billion in 2016—and absent policy changes, the structural gap between revenues and spending puts the federal government on an unsustainable long-term fiscal path, according to GAO.

The report discusses significant changes to the nation’s fiscal condition in fiscal year 2016, long-term simulations of the federal debt and fiscal risks placing additional pressure on the federal budget. GAO also identifies steps that federal agencies can take to improve things, such as reducing improper payments; closing the tax gap; eliminating duplication, overlap and fragmentation in federal programs; and producing better information on program and fiscal operations to strengthen decision-making.